FIRE — The Math Behind Retiring Early

FIRE (Financial Independence, Retire Early) is a movement focused on extreme saving and investing to achieve financial independence decades before traditional retirement age.

The 4% Rule (Trinity Study):

A portfolio can sustain 4% annual withdrawals indefinitely (30+ years)

$1,000,000 portfolio → $40,000/year indefinitely

$2,500,000 → $100,000/year

Your FIRE number = Annual expenses × 25

Spend $40,000/year → need $1,000,000

Spend $60,000/year → need $1,500,000

FIRE variants:

Lean FIRE — extreme frugality; $40,000 or less/year

Fat FIRE — luxurious early retirement; $100,000+/year

Barista FIRE — semi-retirement; part-time work covers some expenses

Coast FIRE — invest enough early that growth reaches FIRE number without further contributions

Savings rate determines retirement age:

10% savings → retire in ~40 years

25% savings → retire in ~32 years

50% savings → retire in ~17 years

70% savings → retire in ~8.5 years

Reference:

Wikipedia: FIRE Movement

https://en.wikipedia.org/wiki/FIRE_movement